Five Game-Changing Trends in Online Games

At the annual NY Games Conference, it's all about being fast, free, and mobile

It’s a blustery fall day at the Museum of Jewish Heritage in New York City, but the people gathered inside aren’t talking about the past. Engineers, programmers, and business execs are here on 5 October for the annual NY Games Conference, an event focused on divining the future of the US $32 billion worldwide video-game industry.

More than ever, the future is online. It’s impossible to grab a coffee without hearing about digital distribution and social networking. Though online games have been around for decades, this year—despite the recession—will go down as the tipping point for disc-free gaming. Whether they’re playing virtual Scrabble with friends on Facebook or downloading Sheep Launcher onto their iPhones, consumers want their games fast and free, which requires a radical shift in both business and technology. ”It’s quite frightening to change to a completely different business model,” Jay Baage, the NY Games director, told the crowd.

Here’s a look at the top five game-changing trends for this dynamic culture and industry:

Photo: Apple

1. Going Mobile

Software engineers looking to break into the game industry should look no further than their phones. According to the NPD Group, a technology research firm based in Port Washington, N.Y., 31 percent of gamers now play on mobile devices. The iPhone’s 16 000 game titles outnumber the combined total for Nintendo’s and Sony’s handhelds, giving the iPhone one-fourth of what New York–based SuperData Research estimates to be a $2 billion global industry for mobile games.

At the recent Tokyo Game Show, nearly one-quarter of the new titles were cellphone games—an unheard of proportion just a few years ago. So far, many are quick and easy parlor-style games, but at NY Games, Masaaki Maeda, president and CEO of NTT Docomo USA, the North American wing of Japan’s leading mobile carrier, gave programmers a glimpse of next-generation gaming—a variety of Wii-like motion-sensing titles that gamers play with their phones, such as bowling (played by flicking your wrist while holding the handset) and dance games (in which you mimic movements of characters on screen using a motion-sensing built-in camera).

Photo: Nexon

2. Free-to-Play

The exact size of the mobile game market is hard to pin down, however, because an enormous number of games on the iPhone—and on Web sites like Pogo.com and even Facebook—are free. Software game engineers call this trend free-to-play gaming. According to Wade Tinney, CEO and cofounder of Large Animal Games, a game developer in New York City, South Korea became the model for free-to-play games when KartRider became a national sensation. After downloading the basic game, users then pay for additional content through microtransactions.

For engineers, this means creating a different kind of game experience—one built more around the idea of augmenting a core experience than delivering a finished game up front. Joost van Dreunen, managing director of SuperData Research, points out that many gamers in developing nations play games by the hour at Internet cafes. As a result, they’re not looking to purchase titles; they just want to play them during their visits to the coffee shops. ”In emerging markets, people play at PC cafes and don’t want to buy games on machines they don’t own,” he says.

Photo: Zynga

3. Social Networks

Facebook isn’t just for friending anymore. Games like Mafia Wars and Texas Hold ’Em are a nearly $500 million business on the site, generally made through premium content and advertising. For game engineers, this trend presents a new way to think about online games. Instead of fast-action or role-playing games, the social network experience often consists of asynchronous, turn-based play. It’s a return to the glory days of independent development on early personal computers in the 1980s. ”The barrier to entry is low, so smaller companies can be successful with one or two games,” says Tomer Ben-Kiki, CEO and cofounder of Oberon Media, a casual-games development company based in New York City.

Photo: OnLive

4. Digital Downloads

With the bandwidth pipe expanding for households, digital delivery is transforming the game experience. Rather than going to a store for a plastic disc, players download high-quality games—either for their PCs, from sites such as OnLive, a games-on-demand service based in Palo Alto, Calif., or their consoles, usually from the hardware makers’ own digital download service (Microsoft’s Xbox Live Arcade, Nintendo’s WiiWare, and Sony’s PlayStation Network). SuperData Research estimates that digital download sales will hit $10.8 billion by 2012, creating further opportunities for smaller-scale games and those with episodic content.

”Game developers are coming full circle to the days when we were programming for the Amiga,” says game designer Eric Zimmerman. ”With the Xbox Live Arcade, iPhones, and social networks, a small group of independent developers can create a game and have it be commercially successful. Small independent developers will take risks and try things that more corporate entities won’t.”

Photo: Take-Two Interactive

5. The $100 Million Dollar Game

Even as smaller game developers flourish, the big ones get bigger, churning out titles that cost as much as movies—as much as $50 million on a major release. ”There’s always an arms race to make your game that much better,” says Ben Feder, CEO of Take-Two Interactive Software, a firm in New York City that publishes such hits as Grand Theft Auto and BioShock. ”As technology gets better, that also means an upward pressure on costs,” he says, even if that means spending as much as $100 million. ”It will be hard for two guys in a garage to develop that kind of quality you see on screen.”

About the Author

Contributing editor David Kushner is the author of Masters of Doom (2003), Jonny Magic and the Card Shark Kids (2005), and Levittown: Two Families, One Tycoon, and the Fight for Civil Rights in America’s Legendary Suburb (2009). He wrote IEEE Spectrum’s September cover story, ”The Making of The Beatles: Rock Band.”